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Pulse Electronics Corporation Reports Fourth Quarter Results

Stocks in this article: PULS

Based on discussions with investors and analysts, the company believes that a reader’s understanding of the company’s operating performance is enhanced by references to these non-GAAP measures. Removing charges for severance, impairment and other associated costs, non-cash stock-based compensation expenses and other adjustments may facilitate comparisons of operating performance among financial periods and peer companies. These charges may result from facility closures, the exit of a product line, production relocations and capacity reductions and / or restructuring of overhead and operating expenses to enhance or maintain profitability in an increasingly competitive environment. Removing non-cash stock-based compensation expenses facilitates comparisons of the company’s operating performance with that of other companies with differing compensation structures and with the company’s performance in periods during which its own compensation structure may have been different. Impairment charges, accelerated depreciation and costs related to an unsolicited takeover attempt are not part of the normal operating expense structure of the relevant business in the period in which the charge is recorded.

Copyright © 2013 Pulse Electronics Corporation. All rights reserved. All brand names and trademarks are properties of their respective holders.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per-share data)
Three Months Ended   Year ended
  12/28/2012    

12/30/2011 [1]

  12/28/2012     12/30/2011 [1]
 
Net sales $ 90,418 $ 90,473 $ 373,169 $ 369,284
Cost of sales   70,701     73,235     298,898     289,148  
Gross profit 19,717 17,238 74,271 80,136
Operating expenses 18,928 18,799 74,712 81,200
Severance, impairment and other associated costs 30 1,128 5,932 14,719
Debt restructuring and related costs 384 - 1,198 -
Legal reserve 5,473 - 5,523 193
Costs related to unsolicited takeover attempt   (545 )   -     (545 )   1,916  
Operating loss (4,553 ) (2,689 ) (12,549 ) (17,892 )
 
Interest expense, net (7,336 ) (1,834 ) (17,435 ) (6,202 )
Other income (expense), net   4,335     (1,182 )   5,213     (561 )
Loss from continuing operations before income taxes (7,554 ) (5,705 ) (24,771 ) (24,655 )
Income tax expense   (4,475 )   (31,755 )   (6,979 )   (23,243 )
Net loss from continuing operations (12,029 ) (37,460 ) (31,750 ) (47,898 )
Net loss from discontinued operations   (345 )   (370 )   (345 )   (28 )
Net loss (12,374 ) (37,830 ) (32,095 ) (47,926 )
Less: Net earnings (loss) attributable to non-controlling interest   150     62     (109 )   (88 )
Net loss attributable to Pulse Electronics Corporation (12,524 ) (37,892 ) (31,986 ) (47,838 )
 
Basic shares outstanding 61,107 41,227 46,673 41,182
Basic loss per share from continuing operations (0.20 ) (0.91 ) (0.68 ) (1.16 )
Basic loss per share from discontinued operations   (0.01 )   (0.01 )   (0.01 )   (0.00 )
Basic loss per share (0.21 ) (0.92 ) (0.69 ) (1.16 )
 
Diluted shares outstanding 61,107 41,227 46,673 41,182
Diluted loss per share from continuing operations (0.20 ) (0.91 ) (0.68 ) (1.16 )
Diluted loss per share from discontinued operations   (0.01 )   (0.01 )   (0.01 )   (0.00 )
Diluted loss per share (0.21 ) (0.92 ) (0.69 ) (1.16 )
 
AMOUNTS ATTRIBUTABLE TO PULSE ELECTRONICS CORPORATION:
 
Net loss from continuing operations excluding non-controlling interest $ (12,179 ) $ (37,522 ) $ (31,641 ) $ (47,810 )
Net loss from discontinued operations   (345 )   (370 )   (345 )   (28 )
Net loss attributable to Pulse Electronics Corporation (12,524 ) (37,892 ) (31,986 ) (47,838 )
 
[1] The Company's prior period financial results have been revised to reflect an immaterial correction. During the third quarter of 2012 the Company identified errors related to its deferred tax valuation allowance recorded in the fourth quarter of 2011. The Company has concluded that the correction was not material to any of its prior period financial statements. As a result of the revision, our other assets increased by $5.5 million and our total deficit decreased by $5.5 million as of December 30, 2011.
 
BUSINESS SEGMENT INFORMATION (UNAUDITED)
(in thousands)
Three Months Ended   Year ended
  12/28/2012     12/30/2011 [1]   12/28/2012     12/30/2011 [1]
Net Sales
Network $ 37,734 $ 40,082 $ 158,089 $ 169,849
Power 27,404 28,004 120,145 135,151
Wireless   25,280     22,387     94,935     64,284  
Total net sales 90,418 90,473 373,169 369,284
 
Operating profit (loss)
Network 1,088 (285 ) 3,519 2,685
Power 886 1,336 5,941 9,275
Wireless   (1,185 )   (2,612 )   (9,901 )   (13,024 )
Operating profit (loss) excluding severance, impairment and other associated costs, debt restructuring and related costs, legal reserve costs and costs related to unsolicited takeover attempt 789 (1,561 ) (441 ) (1,064 )
Severance, impairment and other associated costs 30 1,128 5,932 14,719
Debt restructuring and related costs 384 - 1,198 -
Legal reserve 5,473 - 5,523 193
Costs related to unsolicited takeover attempt   (545 )   -     (545 )   1,916  
Operating loss $ (4,553 ) $ (2,689 ) $ (12,549 ) $ (17,892 )
 
FINANCIAL POSITION (UNAUDITED)
(in thousands)   12/28/2012   12/30/2011 [1]
 
Cash and cash equivalents $ 31,475 $ 17,606
Accounts receivable, net 62,957 59,507
Inventory, net 31,434 36,968
Prepaid expenses and other current assets 21,500 22,144
Net property, plant and equipment 29,406 28,605
Other assets   19,034     16,235  
Total assets 195,806 181,065
 
 
Accounts payable $ 65,883 $ 52,802
Accrued expenses and other current liabilities 44,197 44,935
Warrant liability 12,175 --
Long-term debt 96,753 93,950
Other long-term liabilities   26,342     21,650  
Total liabilities 245,350 213,337
Total deficit   (49,544 )   (32,272 )
 
Total liabilities and deficit $ 195,806 $ 181,065
 
Shares outstanding 79,473 41,980
 
[1] The Company's prior period financial results have been revised to reflect an immaterial correction. During the third quarter of 2012 the Company identified errors related to its deferred tax valuation allowance recorded in the fourth quarter of 2011. The Company has concluded that the correction was not material to any of its prior period financial statements. As a result of the revision, our other assets increased by $5.5 million and our total deficit decreased by $5.5 million as of December 30, 2011.
 
Schedule A        
NON-GAAP MEASURES (UNAUDITED)

(in thousands, except per-share amounts)

 
1. Adjusted EBITDA
 
Quarter Ended
  12/28/2012   12/30/2011 [1]  
 
Net loss attributable to Pulse Electronics Corporation $ (12,524 ) $ (37,892 )
Net loss from discontinued operations 345 370
Non-controlling interest 150 62
Income tax expense 4,475 31,755
Interest expense, net 7,336 1,834
Non-cash stock-based compensation expenses 478 641
Depreciation and amortization 1,900 2,099
Other (income) expense (4,335 ) 1,182
Severance, impairment and other associated costs 30 1,128
Debt restructuring and related costs 384 -
Legal reserve 5,473 -
Costs related to unsolicited takeover attempt   (545 )   -  
Adjusted EBITDA 3,167 1,179
 
2. Net (loss) earnings per diluted share from continuing operations excluding severance, impairment and other associated costs, debt restructuring and related costs, legal reserve costs, costs related to unsolicited takeover attempt, non-cash stock-based compensation expenses and other adjustments
 
Quarter Ended Year ended
  12/28/2012   12/30/2011 [1]   12/28/2012   12/30/2011 [1]
 
Net loss per diluted share $ (0.21 ) $ (0.92 ) $ (0.68 ) $ (1.16 )
Diluted earnings per share from discontinued operations 0.01 0.01 0.01 -
After-tax severance, impairment and other associated costs, per share - 0.02 0.11 0.27
After-tax non-cash stock-based compensation expenses, per share - 0.01 0.03 0.01
After-tax debt restructuring and related costs, per share - - 0.01 -
After-tax legal reserve, per share 0.06 - 0.07 -
After-tax costs related to unsolicited takeover attempt, per share   (0.01 )   -     (0.01 )   0.04  
Net loss per diluted share from continuing operations excluding severance, impairment and other associated costs, debt restructuring costs, legal reserve costs, non-cash stock-based compensation expenses and other adjustments (0.15 ) (0.88 ) (0.46 ) (0.84 )
 
3. Operating profit (loss) excluding severance, impairment and other associated costs, debt restructuring and related costs, costs related to unsolicited takeover attempt, legal reserve costs, non-cash stock-based compensation expenses and other adjustments
 
Quarter Ended Year ended
  12/28/2012   12/30/2011 [1]   12/28/2012   12/30/2011 [1]
 
Operating loss $ (4,553 ) $ (2,689 ) $ (12,549 ) $ (17,892 )
Pre-tax severance, impairment and other associated costs 30 1,128 5,932 14,719
Pre-tax non-cash stock-based compensation expenses 478 641 1,801 1,253
Pre-tax debt restructuring and related costs 384 - 1,198 -
Pre-tax legal reserve 5,473 - 5,523 193
Pre-tax costs related to unsolicited takeover attempt   (545 )   -     (545 )   1,916  
Operating profit (loss) excluding severance, impairment and other associated costs, debt restructuring costs, legal reserve costs, non-cash stock-based compensation expenses and other adjustments 1,267 (920 ) 1,360 189
 
[1] The Company's prior period financial results have been revised to reflect an immaterial correction. During the third quarter of 2012 the Company identified errors related to its deferred tax valuation allowance recorded in the fourth quarter of 2011. The Company has concluded that the correction was not material to any of its prior period financial statements. As a result of the revision, our other assets increased by $5.5 million and our total deficit decreased by $5.5 million as of December 30, 2011.




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